1905.] Agricultural Credit in Hungary. 211 



in cash and the remainder in nine bonds. These nine bonds 

 were to be returned to the founders as the reserved fund in- 

 creased, but the sum paid in cash was retained and bore interest 

 at 5 per cent. Loans are granted either in cash or in " land 

 mortgage" debentures to ordinary members, i.e., borrowers whose 

 land provides a minimum security of 1,000 florins (£8 3). 

 These debentures bind the bank to pay the holder the principal 

 and interest, but the holder cannot require payment at any 

 given time. They are secured not only by the foundation 

 capital and by the mortgages against which they are issued, but 

 also by the mutual and joint liability of the members. They 

 form, therefore, a marketable security which can be passed from 

 hand to hand, and the aggregate loans of the bank up to the 

 end of 1903 had amounted to £27,600,000. The majority of the 

 loans are for sums exceeding ,£4,000. In the Parliamentary 

 Report above referred to, it is pointed out that this bank is not 

 a joint-stock or dividend-earning bank, but a mutual association 

 of proprietors on the principal of unlimited liability as regards 

 the ordinary members, while the founders, being philanthropic 

 and patriotic in their aims, contented themselves with — for 

 Hungary — the very moderate fixed interest of 5 per cent, on 

 their paid-up capital (one-tenth of their guarantee). 



The success of this bank was so marked that in 1879 another 

 similar Land Credit Bank was formed on the same model for 

 small proprietors, bearing the name of the Small Farmers 

 National Land Credit Bank. From a note* on the subject by 

 Count Joseph Mailath, it appears that the State endowed the 

 bank with a loan of one million crowns (£42,000) free of 

 interest. The balance of the capital was made up, as in the 

 other case, by shares (upon which interest was limited to 5 per 

 cent.) taken up by " founders." The lowest loan to be made was 

 £25, but this was reduced by one-half in 1902. The bank had 

 at the end of 1903, £2,300,000 outstanding on mortgage. One- 

 half of these loans are under £80, and only very few exceed 

 £200. 



Apart from these institutions, a number of co-operative credit 

 banks have been in existence in different parts of the country 



* Report of Sixth International Co-operative Congress, Budapest, 1904. 



S 2 



